New Zealand's services sector is "unequivocally upbeat" in the lead-up to Christmas as the country's economy continues to recover from its first recession in a decade.
The BNZ Capital-Business NZ Performance of Service Index (PSI) gained 6.1 points to 56 last month, the highest level since November 2007, and the first time since February last year that all of the sub-indices expanded. The level of 50 separates contraction from expansion.
The PSI comes a week after the Reserve Bank beefed up its economic forecasts, where it predicts annual GDP growth of 3 per cent next year and 4 per cent in 2011, after the recovery in the property market underpinned the resilience of the New Zealand economy.
Returning expatriates and an inflow of migrants wanting housing pushed up house prices as dwindling issuance of new consents limited the number of listings on offer.
House prices held on to their gains this year with the national media price at $355,000, according to Real Estate Institute data.
"Despite the trials and tribulations of the current environment, the service sector, in aggregate, has become unequivocally upbeat about the future," said BNZ head of research Stephen Topliss in his report.
"The increase in the total index is being led by substantial improvements in expectations for activity and new orders."
The overall performance was lifted by a 10.6 point gain in activity/sales to 58.7 and an 8.5 point rise in new orders/business to 61.1. Employment edged up 0.8 points to 51.2, stocks/inventories increased 3.6 points to 50.6 and supplier deliveries jumped 5.2 points to 54.3.
Across the sectors, transport and storage was the strongest at 61.4, while health and community services reached its highest value since August 2007 at 59.4.
Retail trade slipped into contraction mode at 49.6 after two months of expansion, while property and businesses reversed its two months of contraction and climbed to 52.9.
